United States District Court, D. New Jersey
In Re GIANNI N. SPRADLEY, Debtor
GIANNI N. SPRADLEY, Appellee. THE OAKS AT NORTH BRUNSWICK CONDO ASSOC. INC., Appellant,
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter comes before the Court on appeal from the Bankruptcy
Court for the District of New Jersey ("Bankruptcy
Court"). Appellant-Creditor, the Oaks at North Brunswick
Condominium Association, Inc. ("Oaks" or
"Appellant"), appeals from the Bankruptcy
Court's December 26, 2017 Order to strip down Oaks'
claim from the Chapter 13 bankruptcy plan of Appellee-debtor
Gianni Spradley ("Appellee" or
"Spradley"). For the reasons set forth below, the
case shall be remanded back to the Bankruptcy Court for
additional fact finding to certify Oaks fulfilled all the
necessary conditions to perfect its lien to an elevated
priority over the first mortgage.
factual history and finer details of this dispute were set
forth before the Bankruptcy Court. This Court therefore
reiterates only the facts relevant to the present appeal.
was established pursuant to the Master Deed and Declaration
of Restrictive and Protective Covenants, Easements, Charges,
and Liens for the Oaks at North Brunswick, A Condominium
("Master Deed") and the By-Laws for the Oaks at
North Brunswick Condominium Association, Inc.
("By-Laws") (collectively as "the Governing
Documents"). (Appellant Brief at 2-3, ECF No. 4). The
Governing Documents were dated November 13, 1980 and recorded
in the Office of the Middlesex County Clerk on November 13,
1980. Id. at 3.
owns and resides in a unit within Oaks. Id. By
accepting title to the property, Spradley joined Oaks'
Association and agreed to be bound by the Governing Documents
while holding title to the property. Id.
to its Governing Documents, as well as New Jersey law, Oaks
is responsible for clearing snow, maintaining streetlights,
disposing of garbage, and other assorted maintenance duties
associated with the common grounds its members share.
Id. at 15. To fund these services, Oaks collects a
monthly maintenance charge from each member of the
Association, as provided in the Governing Documents.
(Appellant Appendix at 55, ECF No. 4-1). The Governing
Documents further state that any unpaid monthly maintenance
charge may constitute a lien if filed with the County Clerk.
More precisely, it states:
[A] 11 charges, expenses and assessments chargeable to any
unit shall constitute a lien against said unit in favor of
[the Oaks], which lien shall be prior to all other liens
except: (1) assessments, liens and charges for taxes past due
and unpaid on the unit, and (2) bona fide mortgage
instruments, duly recorded, and (3) the [Oaks]'s lien
shall be recorded in the Clerk's Office of Middlesex
County pursuant to the Condominium Act. The charges and
expenses represented in the usual monthly maintenance charge
shall become effective as a lien against each unit on the
first day of each month; additional or added assessments,
charges and expenses, if any, chargeable to units and not
covered by the usual monthly maintenance charge, shall become
effective as a lien against each unit as of the date when the
expense or charge giving rise to such additional or added
assessment was incurred by the [Oaks]In addition, such
charges and expenses shall bear interest from the due date as
set by the [Oaks] at such rate not exceeding the legal
interest rate as may be established by the [Oaks] or, if no
rate is established, at the legal rate.
Id. at 55-56.
failure to pay monthly maintenance charges, Spradley was
referred to collections on or around October of 2008.
(Appellant Reply Brief at 8, ECF No. 6). The Oaks
subsequently recorded four liens totaling $33, 211.62 against
Spradley's property: January 21, 2009, August 14, 2013,
November 18, 2014, and May 28, 2015. (Appellant's
Appendix at 13, 30-43, ECF No. 4-1). Additionally, a
foreclosure complaint was filed on July 19, 2012 by Greentree
Servicing against Spradley. Id. at 26.
March 28, 2017, Spradley filed for Chapter 13 bankruptcy,
valuing his unit at $169, 000 and subject to a first mortgage
of $172, 000. (Appellee's Brief, ECF No. 5, at 2). In
addition to the liens filed, the Oaks submitted an unsecured
claim of $7, 509.59 against the property. (Appellee Brief at
Jersey, liens held by condominium associations for unpaid
maintenance fees are given limited priority over previously
recorded mortgages by the New Jersey Condominium Act
("the Condominium Act"). See N.J. Stat.
Ann. § 46:8B-21. Specifically, such maintenance liens
may be granted limited priority over the first mortgage in an
amount that equals six (6) months of maintenance fees so long
as certain conditions are met. N.J. Stat. Ann. §
proposed Chapter 13 plan included a Motion to Cram-Down the
Oaks' maintenance lien of $33, 211.62 by bifurcating the
lien into a secured lien of $1, 920 (six (6) months of the